Economy growth a sign for optimism?

MERVYN King, Governor of the Bank of England, said in a recent speech that the UK’s national output had fallen by five per cent during 2009 -– the largest fall in a year since the Great Depression of 1931.

MERVYN King, Governor of the Bank of England, said in a recent speech that the UK’s national output had fallen by five per cent during 2009 -– the largest fall in a year since the Great Depression of 1931.

This probably sums up last year’s unprecedented economic turmoil as well as any other statistic.

It was a very tough year, affecting individuals and businesses alike as confidence and demand dropped and the government intervened to try to stabilise the financial markets and reduce the impact of a deep recession.

It might seem strange to say that it could have been worse. However, predictions of a housing market in freefall have been proved wrong so far.

House prices actually recovered a little, ending the year around five per cent higher than they started.

Unemployment too, whilst increasing substantially through the year, showed a slight improvement as we entered 2010. It is now anticipated that the UK economy will have grown slightly in the final three months of 2009 after six quarters of contraction. Cause for hope perhaps, if not optimism.

Government actions may have prevented a financial collapse and the new zero Bank of England base rate helped businesses and home-owners, but the UK now faces enormous levels of national and individual debt.

Credit conditions remain tight, austerity measures and rising inflation may yet damage the recovery and employment prospects. The general election adds a further element of change to an uncertain picture.

Against this backdrop even the strongest organisations will have worked hard to prosper. We will be announcing our annual results in early March and can’t say much until then.

However, half way through 2009 we announced growth in market share and profits and we remain confident now. Most importantly for the city we continue to create new jobs. So, whilst I hesitate to predict the path of the UK economy in 2010, I can reassure members of the Coventry that their building society is doing well and will continue to work hard on their behalf.